The intention to create legal relations is a vital principle of Contract Law. As A.W.B Simpson stated, this doctrine might date back to the landmark decision of Carlill v Carbolic Smoke Ball Company in 1893, but however, it wasn’t in a firm position until 1919, after the case of Balfour v Balfour. Whether or not the parties intended to be legally bound to the contract is the doctrine’s main concern. Acknowledgement of the presence of domestic and social agreements to which parties do not mean to be legally bound has culminated in an assumption that, proportionately, no contract is recognized. Commercial transactions, however, are treated with a presumption that legal relations were intended.
It is stated that in terms of general rules of family or domestic relations, there is no assumption to be bound legally. However, there are exceptions in which the presumption is rebuttable. For instance, Balfour v Balfour [1919] shows that the intention to create legal intentions is crucial for family and domestic relations. Both parties must intend that an agreement be legally binding in order to be an enforceable contract. Matters involving the daily life of husband and wife are not subject to contractual interpretation, even when consideration exists. Spouses habitually intend that the conditions of their agreements can be different as situations develop. The court held that it was assumed that an agreement was made by the parties as husband and